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RBS Bonus - Should We Insist They Pay?


Jul 5, 2007
Just a small point on Hester's waiver: the original plan was for the CEO to receive a performance share bonus of just under £1m. This means that he will receive shares in 3 years time (providing he meets certain conditions); there was no cash element.

He has sinced waived the right to this. As such, the amount allocated will be retained as profit. RBS have so many historic losses though they won't be paying corporation tax, so the Treasury get zero revenue as a result.

If he took the bonus then the shares would be purchased and put in trust. That would incur a 0.5% stamp duty charge (let's say 0.5% on £1m to give £5k). Let's assume that the share price was the same in 3 years when the shares are delivered. He would therefore be subject to tax and NIC at 52% on £1m (£520k) and RBS would pay employer NIC at 13.8% (£138k). You have to take the offset for the corporation tax, but they have so many losses anyway that there is no cash impact.

So, by waiving the bonus the Treasury get zero. If he gets the bonus then the Treasury get £663k. I'm not suggesting he should get it but the Treasury is certainly losing out.

*I've simplified the process and the accounting a bit, but the idea remains valid.
Good stuff, I was having at chat about this with a guy at work this morning, he made a very similar point.:clap:
I reckon the bloke will do what anyone in his position would do and steal £1m worth of office stationery and knock it out at boot fairs and online.